– James F. Taulman, former Editor-in-Chief of the first independently licensed website to offer stock reports and services based on the CAN SLIM® investment system.
5:30 AM – MORNING MARKET UPDATE & WATCH LIST
NOTE: Today’s watch list can be found here.
[dropcap]D[/dropcap]rama remained high on Wall Street this past week as there were hopes of a resolution to the trade war with China, then the arrest of a Chinese executive, all while the Dow was making 1000 point swings.
QUOTE OF THE DAY:
“God gives the nuts, but he does not crack them.”
– Franz Kafka
Recent rally hopes were destroyed as the major averages turned again volatile and negative.
We started the week off strong, and on the heels of a solid previous week where we had a “follow through day” in the market on Wednesday, then more bullish action on last Friday.
First thing, Monday morning, the major averages opened with a gap higher. This quickly put the Dow and the S&P 500 just above our noted technical points of resistance of their respective moving averages.
However, the gains and the bullish optimism wound up being very short-lived as on Tuesday we had another fierce sell off. Seems there was some confusion over the terms of a deal that was struck over the weekend between China and the United States. Main-stream investors have been closely monitoring the trade conflict between the U.S. and China while looking for the Fed to back off from its tightening bias.
The exchanges were closed on Wednesday which gave many of us a needed pause.
The ride continued with another, although less severe, gap lower on Thursday morning followed by continued declines before a positive reversal took hold mid-day. The Nasdaq made a 200 point run and actually closed with a gain on the session.
The indices looked poised to continue higher for Friday morning, however, stocks resumed their sell-off following a weaker-than-expected jobs report.
It became the biggest weekly percentage decline for all three benchmarks since March, while also marking the worst start to a December since 2008, according to Dow Jones Market Data.
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As we can see on the charts below, the Dow Jones shot up right to our chart-noted resistance, and remained in its previously noted longer-term downtrend losing -4.5% on the week.
Chart courtesy of stockcharts.com
The Nasdaq shed another -4.9% on a weekly basis, and fell back into its downward channel.
Chart courtesy of stockcharts.com
The S&P 500 index lost -4.6% this past week as the benchmark pulled back from near previously noted resistance of its moving averages.
Chart courtesy of stockcharts.com
We called the caveats in this latest rally last week with – “…let’s keep in mind that there is still a good deal of overhead supply – leftover from the recent selloff, and several points of resistance for us to watch. Two out of three of the major averages are below their respective 50- and 200-day moving averages – with only the Dow being above its 200 DMA.”
Based on the environment and noted technical concerns with the major averages I said – “We will let our breakouts continue to be our guide.”
I ran my routine stock screens this morning yet did not add any new stocks to our watch list.
We now have a total of 9 stocks which we will be watching for the next buyable breakout – see here.
One of those is EPR which is another REIT.
Chart courtesy of stockcharts.com
Now you can get access all watch lists with updated trading criteria including –TRIGGER PRICE, TRIGGER VOLUME, and MAX BUY PRICE for every stock here.
Missed any of these morning reports? You can find all previous reports here.
Standard rules apply – any gains above the stock’s TRIGGER PRICE while the day’s volume is at least on pace to make the TRIGGER VOLUME would have any of these set ups confirming a BUY signal up to their MAX BUY PRICE by default.
Keep in mind that when a stock breaks out – becomes potentially buyable – there are other factors to consider.
Volume on the breakout. A stock that is breaking out through resistance, with an increase in volume of +50% above the stock’s average volume (50 DAV), is showing more conviction and more demand. This is not saying – all lower volume breakouts will fail. Actually, we’ve seen many continue higher. If you have found that you did buy a stock that showed lower daily volume or volume under 50%, going forward – simply treat it a regular trade.
Earnings BreakOuts. Many stocks from our watch list will break out during earnings season. Earnings breakouts can be more rewarding, however, these trades carry much more risk then traditional (non-news) breakouts. One needs to also consider – the strength/weakness of the fundamental news that was just released along with the forward-looking guidance the company gave, investors response to the conference call, etc. For anyone who is not familiar with – buying earnings breakouts – I suggest that they sit through a few seasons to study, paper trade, and show some profits, before applying actual capital.
As always, if anyone has any questions – please feel free to email me at james@jamestaulman.com as I would be glad to assist you.
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About the Founder: James F. Taulman – James served as Editor-in-Chief of the first independently licensed website that offered stock reports and services based on the CAN SLIM® investment system. He has developed a knack for being able to quickly and accurately analyze high-ranked stocks based on this winning investment strategy. Over the years, Mr. Taulman has enjoyed assisting individuals from professional money managers to private investors with their needs in relation to implementing this investment approach on a daily basis in the current marketplace. Each Sunday you could hear him deliver his weekly market report as part of the “Your Money Matters” radio program on ABC and CBS radio networks. _________________________________________________ Disclaimer: James Taulman is not an investment advisory service, nor a registered investment advisor or broker-dealer and does not purport to tell or suggest which securities or currencies customers should buy or sell for themselves. The independent contractors and employees or affiliates of Company may hold positions in the stocks, currencies or industries discussed here. You understand and acknowledge that there is a very high degree of risk involved in trading securities and/or currencies. The Company, the authors, the publisher, and all affiliates of Company assume no responsibility or liability for your trading and investment results. Factual statements on the Company’s website, or in its publications, are made as of the date stated and are subject to change without notice. It should not be assumed that the methods, techniques, or indicators presented in these products will be profitable or that they will not result in losses. Past results of any individual trader or trading system published by Company are not indicative of future returns by that trader or system and are not indicative of future returns which be realized by you. In addition, the indicators, strategies, columns, articles and all other features of Company’s products (collectively, the “Information”) are provided for informational and educational purposes only and should not be construed as investment advice.